Where you live matters: Urbanisation and labour markets outcomes

Policy Paper 17

Given apartheid’s legacy of irrational spatial planning it should be unsurprising that location matters for labour market outcomes. This paper attempts to quantify this effect by introducing a new urbanisation index into standard employment regressions. Utilising a multinomial logit model, it is found that there is a positive relationship between the probability of being employed and the degree of urbanisation. For example, an individual in Johannesburg is 1,5 times more likely to be employed than a similar individual in a medium-sized town such as Harrismith, and twice as likely to have a job than someone in a small town such as Mthatha. Also, an individual is nearly 1,5 times more likely to be discouraged in Mthatha than Johannesburg. Where you live does matter and it matters a great deal. However, there are outliers. These are important for policy purposes, because these towns have managed to be successful, notwithstanding their relative economic size. Six smaller district councils stand out as successes: Carltonville, Stellenbosch, Malmesbury, Swellendam, Bronkhorstspruit and Knysna/ Plettenberg Bay. Each one of these is located on or near a national highway, has rail linkages to a metropolitan area and has a relatively well-educated or highly skilled workforce. Given the improvement in labour market outcomes that larger towns and cities offer, urbanisation is inevitable. Whilst planning for rapid urbanisation is the obvious conclusion, spatial policy must not underestimate the potential of the mid-sized towns. Improving transport infrastructure, such as rail and road, will, quite literally, bridge the divide between the two economies of the rural poor and the urban rich.

Policy Paper 17
1 May 2010

Related South Africa’s Cities and Growth Spatial Challenges and Policy Interventions Content

Request for Proposals: The role of cities as drivers of growth and employment
Background Urbanization in South Africa is expected to reach 80% by...
Call for Work
South Africa’s future will be decided in our cities
Discussion Document 14 South Africa’s cities face multiple, overlap...
Dieter von Fintel, Justin Visagie, Ivan Turok, Takwanisa Machemedze, Claus Rabe, Sebastian Galiani, Edward Glaeser
Discussion Document
Monitoring South Africa’s metropolitan economies: A survey of the data landscape
Discussion Document 13 Disparities in data across different metropo...
Dieter von Fintel
Discussion Document
Cities, productivity and Jobs in SA: Problems and potential
Discussion Document 12 Cities contribute to national prosperity bec...
Ivan Turok, Justin Visagie
Discussion Document
Place-based economic policies: international lessons for South Africa
Discussion Document 11 Place-based policies are designed to support...
Harris Selod, Claus Rabe
Discussion Document
What luminosity data can and cannot reveal about South Africa’s urban economies
Discussion Document 10 As novel types of data are becoming availabl...
Takwanisa Machemedze
Discussion Document
Crime: A policy-oriented survey
Discussion Document 9 South Africa has a reputation for having high...
Sebastian Galiani
Discussion Document
Virtual CDE Workshop on SA Cities and Growth
Urban economics has provided powerful insights into how the charact...

Search Resources

Ground Floor Brookside Building
11 Imam Haron Road
Claremont, 7700
Cape Town

PostNet Suite # 109
Private Bag X1005
Claremont 7735
Cape Town

Get Social